The largest companies in the United States are organized as C Corporations (C corps). A C corp has the most flexibility for attracting public and private investors. Learn the best practices for managing these legal entities.
The "C" in C corp refers to Subchapter C of the Internal Revenue Code1 where the IRS regulates for-profit businesses organized as corporations.
C corps are usually compared with S corps. S corporations provide favorable tax treatment, but impose ownership limitations which C corps avoid.
C corporations provide several benefits to businesses and investors:
After you form a C corporation, you must maintain it to keep it in compliance. Track the following information for a corporation:
This table summarizes the types of C corporation documents and filings:
|Ownership agreement||at formation||No|
After forming a C corporation, it is important to track compliance obligations. Compliance requirements vary widely based on jurisdiction and line of business.
Here is how to design compliance tracking:
|Trade name or DBA||State||Yes||Yes||Annual|
Of course, you should substitute actual filing requirements for your business. This table gives you a framework to capture the essentials of any compliance filing.
C corporations generally have a Board of Directors corporate structure to separate ownership governance (a board of directors) from management (officers).
Most states require that corporations have a Board of Directors unless the shareholder agreement provides otherwise.7
People often serve more than one role so it is important to list officers and directors by role and not by name. In the long run, it is also helpful to track terms of service for each role and person.
Here is the information to track for officers and directors:
Many boards use a committee structure to parcel out work among board members. The list of roles should also include committee assignments.
Please note that a person can have two different roles with very different terms of service.
Corporate owners and investors are usually called "Shareholders" or "Stockholders". Ownership interests are called "stocks" or "shares". There are several other instruments which convey ownership interests such as options, warrants, and convertible debt. Holders of those instruments should also make the list of ownership interests.
You should capture the name of the owner and the percentage of ownership at a minimum.
To preserve the benefits of your legal entity, effective ongoing maintenance is critical.
Exceptions apply ↩︎
Exceptions apply ↩︎
Specify the government agency. ↩︎
Substitute the actual expiration date ↩︎
Add the periodic cycle. There are exceptions. ↩︎